Bloomberg News

Nestle Uses Sandbags as Thai Floods Threaten 322 Factories

November 09, 2011

(Adds prime minister’s comment in fourth paragraph.)

Nov. 9 (Bloomberg) -- Shifting sandbags in front of Nestle SA’s ice cream plant in a Bangkok industrial park, Ittikarn Puangpradit says he’s confident factories in the area can withstand floods that have swamped hundreds of other plants.

Ankle-deep waters lapped at the curb in front of Nestle’s operations in Bang Chan industrial estate, one of two in the vicinity where a combined 322 factories are under threat from rising waters. Three-meter (9.8-feet) high black plastic sheets draped the factory’s perimeter, reinforced with sandbags and water pumps, as machines continued churning out desserts inside.

“I’m not worried because the water is only rising gradually,” Ittikarn, 46, said yesterday while monitoring water levels in a drain separating the factory from the road. “In other estates that were flooded, the waters rose very quickly. This is manageable.”

Keeping Bangkok’s biggest industrial parks dry is key to government efforts to reassure investors who have seen waters swamp seven estates north of the capital with 891 factories, disrupting global supply chains. Prime Minister Yingluck Shinawatra proposed today spending 130 billion baht ($4.2 billion) to help flood victims and rebuild damaged roads, bridges and buildings.

Accelerating Spending

"The government is accelerating spending on infrastructure and rehabilitation after the flooding to boost consumption and investments," Yingluck told lawmakers today. The economy may grow between 4.5 percent and 5.5 percent in 2012 with inflation as high as 4 percent, she said, adding that expansion this year would miss an earlier target of 3.5 percent to 4 percent.

Flooding caused by heavy rainfall has killed more than 500 people since July. The floodwaters have coursed down a river basin the size of Florida, with Bangkok at its southern tip.

Yingluck is aiming to divert the deluge around downtown business areas, a move that has increased water levels in western residential districts and near industrial estates in eastern Bangkok.

Toyota Motor Corp. yesterday followed Honda Motor Co. in scrapping its 2011 profit forecast after the floods halted production at its Southeast Asian manufacturing base. The impact from the deluge combined with a weak global economy led the Bank of Thailand last month to slash its economic growth forecast for this year to 2.6 percent from 4.1 percent.

Investors Shrug

Investors have shrugged off the floods, with the benchmark SET Index gaining 7.8 percent in the past month and the baht strengthening 1 percent against the dollar, more than currencies in Malaysia, Indonesia and the Philippines. Siam Cement Pcl, the country’s fifth-most valuable listed company, has gained 22 percent in that time, while Thai Reinsurance Pcl has fallen 38 percent.

Bang Chan sits 15 kilometers (9.3 miles) north of Suvarnabhumi Airport, which remains fully operational. Waters that filled surrounding roads had yet to penetrate the estate’s 91 factories, where dozens of workers used forklifts to reinforce dikes with sandbags.

Jamroon Harutanoon, 57, sat on a large pump in front of footwear maker Saha-Union Pcl that moved water from a ditch toward the Saen Saeb canal, which stretches from eastern Bangkok to downtown business areas about 30 kilometers away. Bang Chan has about 20 pumps draining water around the clock, he said.

‘Not That Bad’

“When the army came and started building flood defenses, it boosted my confidence,” said Jamroon, wearing sandals with blue pants rolled up to his knees. “We should be able to defend this estate.”

Soldiers stationed at a nearby temple filled sandbags with folk music blaring from a military transport truck as monks in orange robes monitored water levels. The unit had previously been assigned to protect industrial parks in Ayutthaya and Pathum Thani provinces to the north, where floodwaters overwhelmed the levees and inundated factories.

“Everywhere we went we’d see the water breach our defenses,” Teerapat Phisondee, a lieutenant in the unit, said while looking at a sandbag barrier holding back water from the canal, which had overrun its banks. “This is not that bad. The water level isn’t rising quickly, so our barriers should hold.”

‘We Will Win’

Defense Minister Yuthasak Sasiprapha yesterday visited Bang Chan and nearby Lad Krabang industrial estates, where about 600 soldiers are working to defend 231 factories employing 48,000 workers. The military has received greater public approval in handling the floods than the government, according to an Assumption University poll that surveyed 1,478 people in Bangkok and its outskirts from Nov. 1 to Nov. 5.

“When the water leaks in, we need to block the area, rebuild the dike and drain water as soon as possible,” Yuthasak told reporters. “We will continue to fight and buy time, and we think we will win.”

Over the past month, troops reinforced barriers around Honda’s motorcycle factory, which sits on the edge of Lad Krabang near a mass of water. A plywood wall wrapped in plastic and couched between sandbags and weighted oil drums sat on a gravel dike, holding back chest-deep waters that submerged low- lying wooden houses about 20 meters from the factory.

Thawat Saranatri, 49, observed a two-centimeter rise in water levels yesterday around the plant, which has stopped production for most of the past month because of a shortage of parts. He has spent that time along with about 100 other Honda employees providing hourly updates on water levels.

“I’m optimistic the factory won’t be flooded,” Thawat said. “The government and the military really put a lot of effort to protect us. If our defense is breached, investor confidence will disappear.”

--With assistance from Suttinee Yuvejwattana in Bangkok. Editors: Tony Jordan, John Brinsley

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net


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